An Expatriate's View of Consumer Goods Market of Shanghai

In the first ten months of this year, Shanghai’s gross domestic product (GDP) reached RMB490.982 billion yuan, a year-on-year increase of 11.8 percent at comparable prices (7). The strong growth provided a solid foundation for the development of the consumer goods market , with total retail sales rising by 9. 3 percent year-on-year to RMB183. 648 billion Yuan . Mr Hans Billing , a marketing officer who has been working and living in Shanghai for a decade, made the following remarks about the consumer goods market of Shanghai this year and he also made a forecast for the next year . “As for this year’s market characteristics* I think, first of all, the sales were brisk in Ql and Q3, but sluggish in Q2. Retail sales of consumer goods in the first quarter this year were strong, topping RMB55. 344 billion yuan, up 9. 1 percent year-on-year. But starting from the second quarter, the negative impacts of SARS began to surface, especially during the May 1 Labor Day Golden Week, with the catering, entertainment and general merchandise retail sectors being the hardest hit. Retail sales reached Breitling Replica RMB52.96 billion yuan in the second quarter, up 8.49 percent year-on-year. The market made a rapid rebound at the end of June thanks to the relief measures such as tax concessions, loan interest subsidy, and fiscal subsidy offered by the central and local governments. (9) By September and during the October 1 National Day Golden Week, retail sales made compensatory gains due mainly to two factors. First, consumption related to festivities and travel was postponed to the October Golden Week because of SARS. Second, the easing of marriage registration rules triggered a wedding boom in early October. Retail sales in the third quarter amounted to RMB56. 373 billion yuan, up 10. 29 percent year-on-year. The 3,000 retail outlets of Shanghai’s 282 large and medium commercial enterprises posted a 25. 2 percent increase in sales at RMB2. 273 billion yuan during the golden week holiday.

Secondly, there are some new consumption hot spots. Housing and automobile sales are major drivers. (10) A total of 53, 100 sedan cars were sold between January and October, an increase of 41.8 percent year-on-year, with sales reaching RMB10. 8 billion yuan, up 43 percent year-on-year. As for services, in the first ten months of this year, per capita expenditure of urban households rose by 17. 9 percent year-on-year to RMB2,613 yuan, 6. 2 percent higher than that of overall expenditure. Increases in education and telecommunications services stood at 41.5 percent and 18.5 percent respectively. Thirdly, there are changes in household electrical appliance purchases. Household appliances consumption has shown changes in product type in addition to continued increase in demand. For instance, sterilizer sales received a strong boost, as consumers were eager to fight SARS. From January to October, retail sales of household sterilizers, dishwashers and microwave ovens increased year-on-year by 34.7 percent, 27.2 percent and 24.9 percent respectively. While the exceptionally high temperatures this summer dampened people’s incentive to travel and shop, sales of air-conditioners and Breitling Bentley Replica electric fans posted increases of 49.1 percent and 25.5 percent respectively during the period. Fourthly, the catering industry remains to be a sunrise industry. The catering sector made a strong comeback during the third quarter despite the severe blow by SARS during the preceding quarter. In January – October, the catering sector posted a year-on-year growth of 11.2 percent in sales, 1.7 percent higher than that of wholesale and retail trade.” In his forecasting of the next year, Mr Hans Billing concluded as follows: “The central government will continue its efforts in raising people’s income, creating consumption focuses, and improving the consumption environment. Trial reforms of the tax system in the rural areas will continue with a view to alleviating farmers’ burdens and facilitating their job search in the city. Also, measures will be stepped up to increase employment opportunities in the urban areas. All these should help stimulate domestic demand.

The housing market will continue to surge ahead. Over the past five years, more than 10 million square meters of commodity housing space were completed and sold every year. In the first ten months of this year, sales of commodity housing reached 14.6 million square meters, up 19.1 percent year-on-year. The central government has adjusted its real estate market policy by giving more support to the development of ordinary commodity housing and economy housing. There will be an increase in the supply of low-to-medium priced housing in the city to meet the demand of the middle and low-income earners. A booming property market plus the introduction of a low-rent housing system is set to boost the Omega Replica Watches sales of related items such as furnishing, household electrical appliances and furniture. With the implementation of CEP A this year, mainland enterprises will face greater competition as Hong Kong products and services will enjoy easier access to the mainland market due to zero tariff. At the same time, CEPA will facilitate the upgrading of mainland industries and give a fresh impetus to overall economic development, which bodes well for the consumer goods market. Furthermore, the positive impact brought by the hosting of the World Expo will also become more apparent.